Gazprom defaults on the delivery of at least 5 cargoes to GAIL

19 Jul 2022 , 02:29 PM

As a result of its retaliatory measures against one of the businesses that supply gas to India, news reports claim that Russia has defaulted on the delivery of at least five cargoes or shiploads of LNG to India.

The largest gas company in India, GAIL, has a long-term agreement to purchase 2.85 million tonnes of LNG annually from a Singapore-based subsidiary of Russian gas producer Gazprom.

According to various reports, the company has been in default since June on the provision of 5 cargoes of LNG under that contract, citing difficulties obtaining gas owing to sanctions.

Polish pipeline owner EuRoPol Gaz, Gazprom Germania, and the Gazprom affiliates in Austria, Belgium, Bulgaria, Czechia, France, Germany, Italy, Hungary, Poland, Romania, Slovakia, Switzerland, UK, US, and Singapore are among the organizations that have received sanctions.

With Gazprom Marketing & Trading Singapore, GAIL has a contract. However, this business’ ownership structure was changed, and Gazprom Germania was now in charge.

According to reports, the sanctioned entities are unable to keep their promises to customers because they have either limited or no access to Russian gas.

They claimed that GAIL is looking into legal measures to uphold the contract.

In the past, Gazprom made small changes like postponing one cargo that was scheduled to arrive in May and splitting shipments. However, it is currently in default on the provision of 5 cargoes, including 2 in July.

According to the agreement, Gazprom is gradually boosting supply to GAIL. In 2021, it exported 2 million tonnes of LNG, and in 2022, it will deliver 2.5 million tonnes. In 2023, a total volume of 2.85 million tonnes will be reached.

According to its term agreement, GAIL anticipated that Gazprom will supply roughly 40 LNG shipments in 2022 and the full committed volume of 46 cargoes in 2023.

According to news reports, the Gazprom division has not offered a solid schedule for the supply of gas for the remaining months of the year. However, the situation might be resolved diplomatically.

Since Moscow’s deployment of soldiers into Ukraine on February 24, the US and European nations have placed severe sanctions on Russia. Since certain western oil companies have announced their withdrawal from Russian projects, Indian companies are seen as the obvious choice to participate.

Despite condemnation from the west, India increased its oil purchases from Russia following the Ukraine war and still conducts business with Moscow.